Ottawa looking to end expensive property tax rebate programProgram that gives refunds to landlords has cost more than $80 million over last six years.

By: Ryan Tumilty, Metro
Published on Mon Mar 06 2017

The city is looking at ending a tax-rebate program that has doubled in cost over the last six years, returning more than $80 million to owners of properties that aren't fully occupied.

The vacancy-rebate program gives proportionate tax rebates to owners of commercial and industrial properties that don't fill all the space in their buildings.

A landlord that fails to rent all the space in a downtown building, for example, can apply for a property-tax rebate of up to 30 per cent.

Over the last six years, the city has given out 6,000 such rebates. The city has sent about $59 million to landlords over that time, with another $23 million in education property taxes also rebated. The cost of administering the program adds another approximately $3 million.

In 2009, the program cost $9.2 million; in 2015 it cost $18.3 million.

Wendy Stephanson, the city’s deputy treasurer, said they’re doing consultations on the program this month, looking at everything from scaling back the program to simply ending it.

The provincial government said last year that municipalities would have more flexibility in the rebate program.

Stephanson said right now landowners have to provide proof their space has been vacant for at least 90 days and that they have attempted to lease it.

She said the city can’t get into whether the landlord is seeking a reasonable lease price or whether they have actually invested in improving the space.

“The quality doesn’t come into place at all. It’s really just trying to prove an indication to the city that you’re trying to get the space leased.”

She said they believe landlords want their space rented, but they’re worried right now the rebate program sends the wrong message.

“This program doesn’t necessarily incentivize behaviour,” she said.

Coun. Mathieu Fleury said he believes it’s time to end the rebate.

“I don’t understand why we would give that type of incentive for property owners, especially on ground floor commercial on main streets,” he said.

Fleury said he often hears from constituents who see space sit vacant, taking vibrancy out of the community.

Commercial landlords who have enjoyed millions in property tax breaks to offset lost revenue from empty units are bashing the City of Ottawa for planning to eliminate the juicy rebates.

“To suddenly throw a program out when you’ve got a period of time when you want to encourage economic development, you want to encourage growth and you don’t want to impose new taxes on people, that’s not the time to do it,” said Bernie Myers, Morguard Investment’s vice-president of office and industrial in Eastern Canada.

Morguard is the largest commercial landlord in downtown Ottawa, but Myers said “this is a very serious issue” for landlords of every size.

The city has offered annual tax rebates – 30 per cent for commercial and 35 per cent for industrial – if parts of those buildings are vacant for 90 consecutive days. The province mandates the rebate but now it’s open to making changes, prompting the city to pursue closing the program.

Mayor Jim Watson has been calling for the province to shut down the commercial tax “loophole.”

The tax rebate is costing the city big money.

The 2016 city budget ended in an operational surplus, but handing out vacancy tax breaks, in combination with remissions from property assessment appeals, officially put the budget in a deficit position.

Landlords say the city would be ignoring history. In 1998, commercial landlords took responsibility to collect the former business occupancy tax from tenants and the city, in turn, collected the amount through property taxes. The vacancy rebate was developed in recognition of those unoccupied units.

Dean Karakasis, executive director of the Building Owners and Managers Association of Ottawa (BOMA), said the city saved millions of dollars from not having to administer the business occupancy tax system.

“You could argue whether 17 years later is so far ago that we should forget this,” Karakasis said. “We haven’t forgotten it. We know where it is.”

According to the city, there were about $59.2 million worth of municipal tax breaks spread across nearly 6,000 vacancy rebate applications between 2009 and 2015. The total impact increases to $85.3 million when rebates on education taxes, costs to administer the program and interest are also added. Annual program costs doubled in 2015 compared to 2009.

“The reality is, people who have empty buildings right now have absolutely no incentive or very little incentive to fill the buildings,” Watson said. “As a result, we have buildings that have been vacant in some instances for years and they’re getting a substantial break in taxes, which means every other property owner is subsidizing these big stores or corporations or, in fact, the Government of Canada.”

The feds are a significant landlord and their downsize in office space is also driving the commercial vacancies.

Watson also bemoaned “slumlords” who don’t fix up commercial buildings for occupancy and enjoy paying fewer property taxes to the city.

On the other hand, Myers of Morguard said almost all landlords would rather have a tenant paying rent than collect a small tax rebate.

BOMA, which has published a position paper on the city’s plan, complains about a “lack of transparency” in developing options on the future of the rebate.

The city is going through consultations and has come up with three proposals: erase the rebate now, erase the rebate in phases or erase the rebate gradually for each property.

In other words, the city wants to stop the tax rebate, sooner or later. Landlords have been told the city wants to present recommendations to council’s finance and economic development committee in April.

“When a consultation already has three proposals that are basically the same, it’s not really a consultation as it is an imposition,” Myers said.

BOMA could put forward other options for the city to consider.

Watson doesn’t want to hear arguments from the industry that simply call for the status quo.

“I’ll listen to their feedback,” Watson said, “but they can’t simply come and say, ‘We’re not going to pay’.”

Responded Karakasis: “We understand that. We would like to sit down and get all of these issues identified clearly, the goals we want to accomplish, and then develop a solution.”

Given its rapid sales trajectory it was only a matter of time Shopify would outgrow its state-of-the-art headquarters building at 150 Elgin St.

That 170,000-square-foot facility was outfitted just three years ago. But last week Shopify Inc. signed a lease to eventually take over an additional 325,000 square feet of nearby office space at 234 Laurier Ave. — best known as the former headquarters of the Export Development Corp., a federal crown corporation.

“Ottawa may be one of the best places in the world right now to build a multibillion-dollar business,” said Harley Finkelstein, Shopify’s chief operating officer. “In fact, we consider Ottawa to be one of Shopify’s competitive advantages.”

Shopify will begin fitting up floors two through six this July, with employees starting to move in early in 2018, according to the terms of the multi-year lease with Gillin Engineering & Construction and Slate Asset Management. Plans call for Shopify workers to fill an additional four to five floors each year until all 19 floors are occupied.

“Our problem has always been not having enough space,” said Greg Scorsone, director of internal operations at Shopify. He added he was “very confident” the company would eventually fill it.

All of this is heavily contingent on Shopify’s success in selling its software to online merchants around the globe. On current trends, Shopify’s headquarters operation would reach about 3,000 employees by year-end 2021.

This compares with 750 employees currently. Shopify also employs 1,150-plus workers outside the national capital region, with offices in Toronto (300 employees), Kitchener-Waterloo (170), Montreal (90) and San Francisco (20). The e-commerce firm also employs nearly 600 technical experts who operate from home offices, mainly in Europe and across North America.

They moved to 234 temporarily while the Bank of Canada building was under renovation. As far as I can see passing by it a few times a week, it seems they've moved back in.

Your mention of the Bank of Canada building made me think about the Currency Museum next door. Apparently, it should be opening this Summer. They also registered a new address specifically for the museum: 30 Bank Street

Given its rapid sales trajectory it was only a matter of time Shopify would outgrow its state-of-the-art headquarters building at 150 Elgin St.

That 170,000-square-foot facility was outfitted just three years ago. But last week Shopify Inc. signed a lease to eventually take over an additional 325,000 square feet of nearby office space at 234 Laurier Ave. — best known as the former headquarters of the Export Development Corp., a federal crown corporation.

“Ottawa may be one of the best places in the world right now to build a multibillion-dollar business,” said Harley Finkelstein, Shopify’s chief operating officer. “In fact, we consider Ottawa to be one of Shopify’s competitive advantages.”

Shopify will begin fitting up floors two through six this July, with employees starting to move in early in 2018, according to the terms of the multi-year lease with Gillin Engineering & Construction and Slate Asset Management. Plans call for Shopify workers to fill an additional four to five floors each year until all 19 floors are occupied.

“Our problem has always been not having enough space,” said Greg Scorsone, director of internal operations at Shopify. He added he was “very confident” the company would eventually fill it.

All of this is heavily contingent on Shopify’s success in selling its software to online merchants around the globe. On current trends, Shopify’s headquarters operation would reach about 3,000 employees by year-end 2021.

This compares with 750 employees currently. Shopify also employs 1,150-plus workers outside the national capital region, with offices in Toronto (300 employees), Kitchener-Waterloo (170), Montreal (90) and San Francisco (20). The e-commerce firm also employs nearly 600 technical experts who operate from home offices, mainly in Europe and across North America.

They also recently leased another 60,000 sq ft currently under construction in Uptown Waterloo that will reportedly provide space for up to 400 workers. Their current Waterloo office, in the old Seagrams Distillery museum, can house up to 300 employees.

Advocates pitch ideas for Civic pharmacy sign as building goes up for saleSign an example of Googie architecture

By: Ryan Tumilty, Metro News
Published on Sun Mar 19 2017

An iconic Ottawa sign could be operating on borrowed time as the building it’s attached to is up for sale.

The Civic Pharmacy building on the corner of Carling and Holland is on the market for $3.36 million. The building has stood on the corner since 1959, and the pharmacy sign was one of the featured attractions when it opened.

Most Ottawans will recognize the sign: five multicoloured boxes, which used to rotate, sitting at staggered heights on pedestals, emblazoned with black letters spelling out C-I-V-I-C.

Local blogger Andrew King wrote about the sign on his site Ottawa Rewind earlier this month. He said the sign is an example of Googie architecture, which is becoming harder to come by.

“Googie architecture is a style of modern futurist architecture that evolved through the Atomic Age of the 1950s and 1960s culture, with jets, and the space-age being inspiration to its style,” King wrote.

Leslie Maitland, co-chair of Heritage Ottawa, said the building itself is just OK, but the sign has to be preserved.

“It’s an OK example of mid-century modern, but the sign is an Ottawa icon,” she said. “It’s very representative of that era, think of the '60’s and the Bond films.”

Maitland said seeking a heritage designation for the building, just to save the sign, might be an overstep.

“It seems like using a cannon to swat a fly,” she said.

She said the sign needs to be protected, but that doesn’t mean the building itself has to stay.

“It should find a home where people can see it, but we can be imaginative about where it might end up.”

Maitland suggested the Ottawa Art Gallery could be a home for the sign, but said there are a lot of possibilities to preserve the sign if it needs to be saved.

“It could find a home anywhere all over the city, which is a really fun thing to consider.” she said.

Metro attempted to interview the realtor of the building and building owners, but our interview requests were not returned.